Konstantin Guericke (1967-)

Konstantin Guericke is a web 2.0 pioneer and co-founder of LinkedIn, the world’s largest online business network. Guericke first came to the United States as a high school exchange student and then returned to pursue further studies at Stanford University. Benefiting from a unique environment for innovation, entrepreneurship, and collaboration, he found pathways to Silicon Valley’s high tech start-up scene.

Konstantin
Guericke (born September 19, 1967 in Hamburg, Germany) is a web 2.0 pioneer and
co-founder of LinkedIn, the world’s largest online business network.[1] His story represents that
of a generation of immigrants who came to the U.S. for higher education. Guericke
first spent a high school exchange year in Pennsylvania and then returned to
the United States to pursue further studies at Stanford University, where he
received a master’s degree from the School of Engineering. Benefiting from a unique
environment for innovation, entrepreneurship, and collaboration, he found
pathways to Silicon Valley’s high tech start-up scene.

Recognizing
the potential of the Internet with its vast networking possibilities, Konstantin
Guericke and his future co-founder Reid Hoffman developed the idea for a
business-oriented online network for professionals. In May 2003 LinkedIn was
officially released. At the company Guericke led marketing activities from
launch to the first six million members and from there to profitability in
2006. Once the platform's growth had become self-sustaining, he left LinkedIn to
seek new challenges. Five years later, in 2011, LinkedIn went public. It was the
biggest Internet IPO since Google’s debut in 2004 which gave the online
business network a value of $4.25 billion.[2] Today Konstantin Guericke
is a partner at the German venture capital firm Earlybird through which he
supports entrepreneurial ventures which have the potential to be a success on a
worldwide scale.

As it turned
out, St. Marys, which lies in the center of Pennsylvania's elk county and is
known as a game hunter’s paradise, was an even more tranquil and sleepy town
than Zeven.[4] While living in the U.S.,
Guericke became interested in American institutions of higher education and
investigated study opportunities at Harvard, Stanford, and Princeton, traveling
to nearby universities and sampling the life there. He came to appreciate the
residential campus life which combined traditional studies with social activities
such as student clubs, organizations, and sports. The holistic nature of
American higher education, which emphasizes individual growth, and the personal
contact between faculty and students reinforced Guericke's decision to study in
the United States.

After
completing twelfth grade in Pennsylvania, Guericke earned his high school
diploma and thereby access to higher education in the United States. At the
request of his parents he returned to Germany to finish Gymnasium, but in 1986 went back to the United States to pursue
further studies. Because the non-resident tuition fee at American colleges and
universities was beyond his means, Guericke had to rely on a scholarship and
applied to some of the top private universities, including Harvard and
Stanford. In his recollection, this was due to a very practical reason: at that
time only a handful of colleges, all of them private, offered financial aid to
foreign students. Plus, America’s best institutions of higher education had
been broadening their accessibility to middle class students since the 1970s.

By this time
Guericke had acquired a strong interest in technology, especially in the
flourishing field of software development, which he saw as one of the keys to the
future. Stanford was his first choice—the university’s geographic proximity to the
high technology area of Silicon Valley being a prime consideration. Guericke
was thrilled when he was admitted to Stanford, and the university's need-blind
admissions policy meant that he would get a package of loans and scholarships
enabling him to attend.

At Stanford he
created his own interdisciplinary major: Innovation, Technology, and
Organizations. He combined engineering courses with social and psychology
classes because he was interested in exploring the intersection of psychology,
sociology, and computing. But Guericke did not pursue an engineering career.
From the beginning he was highly ambitious and determined to be an innovator,
focusing on business and entrepreneurship. During his studies Guericke attended
an entrepreneurship course where successful Stanford entrepreneurs shared the
story of how they started their high-tech startups. It was in this course that he
established his first contacts with successful high technology entrepreneurs
from Silicon Valley. The open-minded culture of innovative entrepreneurship at
Stanford University had a strong impact on Guericke and encouraged him to start
his own technology business when the time was right.

High tech
entrepreneurship education and scholarly research on technology firms have had a
long tradition at Stanford University, with industry and academia collaborating
successfully in a number of ways. Frederick E. Terman (1900–1982), a professor
of electrical engineering who served as provost from 1955 to 1965, played a key
role in fostering close ties between Stanford and the emerging technology
industry.[5] He realized that organized
interaction with the local tech industry could provide not only financial assistance
but also intellectual support and innovative stimulation for both faculty and
students. Terman promoted the development of Stanford Industrial Park (now
known as Stanford Research Park), one of the world's first industrial parks and
a cornerstone of what is today known as Silicon Valley.[6]

During his
tenure Terman greatly expanded the research capability of the science,
statistics, and engineering departments, raising “steeples of excellence”—clusters
of science in the School of Engineering.[7] He helped transform
Stanford University from a financially struggling regional university to an
internationally recognized university attracting the best students from around the
world to the region. Terman energetically encouraged his students to stay in
the area after graduation and use their knowledge to start their own
businesses, converting scientific innovations into useful products and services.
Two prominent beneficiaries of this vision were Stanford alumni William Hewlett
and David Packard, who established their fledgling electronics company in a
Palo Alto garage with Terman's support and went on to become one of the leading
personal computer manufacturers. Other successful companies founded by Stanford
faculty and former (often foreign-born) students include Sun Microsystems, Yahoo,
PayPal, and Google.

To gain
entrepreneurial experience, Guericke started working for several small
start-ups in the software and Internet industries in Silicon Valley, where he soon
held key positions in marketing. In addition, he worked informally as a
consultant for various information technology companies. In the following
years, these jobs led Guericke to develop and maintain a valuable professional
network which he described as his “social capital.”[9] Pursuing a very simple but
effective strategy, he would meet people to chat informally over lunch. As his
circle of contacts expanded, Guericke came to realize that these relationships
were one of the most valuable assets he possessed.

In 1996 when Guericke
worked as vice president in marketing at Black Sun Interactive, a pioneering
company in 3-D social software, he met Reid Hoffman, at that time a product
manager at Fujitsu Software Corporation. Hoffman was a California-born graduate
of Stanford University and Oxford University, in his late twenties and, like
Guericke, highly talented and creative. Both men were involved in online
communities and met as participants on a panel in San Francisco about the
subject.

In 1997,
Hoffman, who had been experimenting with the idea of online social networks for
some time, started one of the first networking sites, a dating service called
SocialNet, but his foray into social media did not take root.[10] Still, Guericke and
Hoffman persisted, and together began discussing the burgeoning
online-community market—why some web sites worked and why others failed.[11] Both had been quick to
observe the potential of the Internet to connect people in unprecedented ways. On
long walks together they brainstormed how a useful tool for professionals could
be built to store, present, and manage each member's existing network of
business relationships and thereby promote each member's career.

In the late
1990s the first social network services emerged. Many of those web sites had a
strong focus on dating and friendship. In 1997, one of the earliest modern
social networking sites was launched, founded by financial analyst and legal
professional Andrew Weinreich.[12] SixDegrees was built upon
real relationships between real people, using their real names for
interactions. It was the first site to combine personal profiles, instant
messaging, and the ability to invite friends to the platform as well as to view
and search their lists of connections.[13] Users joined SixDegrees
after receiving an email introduction from an existing member—a trendsetting
method of recruitment at this time that would be imitated by subsequent social
networks. SixDegrees was the predecessor to sites like MySpace, Friendster, and
Facebook.[14]

During its
heyday, SixDegrees reached more than 3.2 million registered users in 165
countries.[15]
Despite venture capital financing, Weinreich was not able to convert the site
into a profitable business. The pioneering site lacked key features such as
spam filters and personal photographs, an integral part of today’s social
networking sites. Unable to reach profitability, SixDegrees was sold for $125
million in early 2000 and ultimately shut down at the end of 2000. Looking
back, Weinreich believed that SixDegrees was ahead of its time, since digital
cameras were not ubiquitous and most people did not have extended networks of
friends who were online.[16]

LinkedIn was
founded as part of a second generation of social network sites in the early
2000s after the “dot-com bubble,” a time of great enthusiasm about the
prosperous “new economy” promised by the rapidly expanding Internet sector,
burst. The boom was followed by a rapid decline in stock prices. Eventually, “web
2.0” emerged: social networks as well as blogs, wikis, podcasting, RSS feeds
and file sharing tools belonged to a number of new advanced Internet
applications which focused on collaboration and interactive information sharing.

Between 2001
and 2004 about thirty social networking start-ups were launched.[17] These new services fell into
two major categories: Web sites with a focus on social relationships such as friendship,
dating, or marriage; and sites devoted to business/professional networking,
helping users to find jobs, people, or business opportunities. In 2001, one
year before LinkedIn was founded, Ryze was launched by Adrian Scott, an early
investor in the file sharing site Napster. It was similar to LinkedIn and was
intended as a tool to help business professionals build and expand their
contacts. Ryze, which grew out of a real-world networking club, claims for
itself to be the “original online social & business network” and became a
role model for other business-oriented network sites.[18] It offered a free basic
membership, allowing users to create individual personality profiles, and paid
premium services such as advanced searches. The site, which initially focused
on the high tech community, became a main competitor for LinkedIn at the
beginning, but never acquired the mass popularity that LinkedIn did.[19] The people behind Ryze
had close ties with the founders of several other social network sites launched
shortly afterwards, among them LinkedIn, Tribe, and Friendster. They all were
members of Silicon Valley’s business and technology community and tightly
entwined personally and professionally.

In 2002,
Guericke and Hoffman, who had just left PayPal, revived their regular meetings.
Not long after that Friendster was launched, a Silicon Valley based social
networking start-up for dating and making new friends via friends-of-friends
connections. Friendster attracted more than three million registered users by
fall 2002 but failed to solidify its position as the “pioneering front-runner
in social networking.”[20] The surging popularity of
Friendster led Guericke and Hoffman to pursue the idea of their own social
network for business professionals which would help them to connect online. They
studied the development of those social media start-ups—many of which were
based in Silicon Valley—very closely, particularly the question how they were
going to make a profit. Guericke described it as “taking lessons from the
pioneers and not repeating the same mistakes again.” Both entrepreneurs felt
that the timing was good.[21]

In October
2002, Hoffman gathered a team of people from his personal network of former
colleagues from SocialNet and PayPal to work on their new idea. The core team
consisted of three other talented Silicon Valley professionals—Allen Blue, Jean-Luc Vaillant, and Eric Ly—who were all highly skilled and brought
engineering and technology know-how to the team. The founders divided
management responsibilities among them: while Hoffman became chief executive officer
at LinkedIn, Guericke was intended to lead the company's marketing activities
as vice president of marketing based on his prior work experience. LinkedIn
started out in Reid Hoffman's apartment in Mountain View, California, in late
2002, where details for the new Internet platform were developed and coding commenced.
After securing office space in Mountain View, LinkedIn officially launched on
May 5, 2003.

Using the
first version of LinkedIn, members could create a profile which could be as
basic as one’s name, one’s geographic area and industry or as broad as an
entire work history, consisting of educational attainments, detailed work
experience, and other relevant business data. In addition, users could invite
their own personal contacts to the network to become a connection. One goal of
LinkedIn was to connect people who already knew each other in the real world on
its network platform. The founders of LinkedIn believed that these
relationships were built on trust—that members would only invite and accept connections
to people they trust, who they have experience working with, and who could be
seen as personal references. From the beginning the implied mutual trust in the
relationships was a great strength of LinkedIn. Furthermore, in order to
distinguish the site from a purely social network, LinkedIn was launched
without profile pictures.

Based on the
concept of six degrees of separation, which suggests that any two people are
connected by an average of six steps of connection or fewer, LinkedIn allowed
registered users to build a contact network, benefiting not only from their
direct associates, but also the associates of those associates, etc. The
platform helped members map and exploit a network of business relationships and
contacts much broader than the ones they maintained in real life. An important
feature was that users could search the profiles in their extended network out
to four degrees of separation to find someone with specific capabilities.
Having found the right candidate, they could use the network to ask for an
introduction. In this way the platform paved the way for a new kind of
professional people search.

At first,
LinkedIn’s founders invited three hundred and fifty of their most important
contacts—primarily members of the Silicon Valley high tech community—to join
the site. These contacts invited others, who in turn introduced others. By the
end of the first month in operation LinkedIn had a total of 4,500 members sign
up.[22]At the end of 2003, the web site had over 81,000 members and LinkedIn had fourteen
employees. And yet, LinkedIn’s survival was never a foregone conclusion: after
the dot-com bubble burst, consumer Internet ventures were looked upon with
skepticism, and the founders worked hard to distinguish LinkedIn from other,
similar ventures.

In the
following months the platform continued to grow fast. By April 2004 it had
550,000 users; a year later membership reached 4.5 million.[23]Without any advertising the network successfully spread from person to person
through a viral process. One main reason for the rapid growth of the platform
was that LinkedIn’s strategy enlisted members as marketing agents, motivating
users to invite their friends or professional acquaintances to the platform and
spread the word about the new service.[24] By doing so, they increased their accessible network. Although anyone could become
a member, the majority of users joined by accepting an invitation from an
existing member.[25]In order to mobilize its recruitment network, LinkedIn successfully pursued a
two-staged approach: first it attracted a critical mass of job seekers, then it
focused on recruiters.[26]As the network expanded, it created substantial value to its users, finding the
right person for business deals, expertise, and recruiting. Each new member
made LinkedIn more useful by contributing his/her professional profile as well
as his/her trusted contacts to the network.

Among the
first user groups who adopted LinkedIn were business executives, researchers,
venture capitalists, professional recruiters, and hiring managers. In contrast
to social networks like Friendster and MySpace, LinkedIn “took a more serious,
sober approach to the social networking phenomenon” and sought from the
beginning to focus on business professionals.[27] The platform was aimed at users between twenty-five and sixty-five years of
age—according to Guericke an audience with a greater monetary potential than a
younger target group.[28]LinkedIn intended to be a useful career networking tool for people whose
professional needs were in the foreground and who were willing to pay for
premium services. In an interview in 2006, Guericke explained what made
LinkedIn different from other social networks: “We're here to build a business,
not to create something cool. MySpace and Facebook have done really well. And I
think they can monetize what they have built, probably by adding in more
e-commerce. But I think the opportunity on the business side is ultimately larger.”[29]

As with many
other business ventures in Silicon Valley, the strong venture capital
infrastructure based in the region played an important role in the development
and growth of LinkedIn. Hoffman had personally bankrolled LinkedIn at the start
in order to keep the service running. After the initial start-up phase, the
venture sought a more professional way of raising additional funds. In November
2003 it received $4.7 million of venture capital financing from Sequoia
Capital, one of Silicon Valley’s most influential venture capital firms which
had made prior investments in well-known Internet companies such as Yahoo,
Google, and PayPal.[30]The funding helped LinkedIn in several respects. On the one hand the platform
received more attention in the Valley’s community and beyond, and on the other
hand the funding was used to accelerate the development of additional
networking features like interest groups and an address book upload. Not long
after closing the first round of venture capital funding, the start-up moved to
a larger office in Mountain View, California.

In summer
2005, Guericke and Hoffman had to decide on a revenue-generating strategy to
exploit LinkedIn’s multimillion-user base.[31] By this time the site had
attracted more than three million businesspeople, but had little revenue to
show its investors. Built upon LinkedIn’s professional network, the first
revenue stream was introduced in March 2005 when the company released a
fee-based job listing service. The new service, named “LinkedIn Jobs,” was
announced as “the Internet’s first relationship-powered job network that
connects job applicants with the hiring managers, HR professionals or
recruiters representing the jobs listed on LinkedIn.”[32]LinkedIn Jobs allowed recruiters to post a job advertisement for $95 per
listing. It also enabled them to collect unique data on applicants, e.g.
referrals or independent references for candidates, providing valuable insights
into their trustworthiness and reliability.[33]These factors were difficult to assess through résumés and interviews alone. Job
seekers, on the other hand, found open positions, received background
information on the job poster, and could learn which of their existing
professional contacts were in a position to introduce them to the recruiter or
hiring manager of a target company.

By adding this
application to the platform, LinkedIn focused on the recruiting industry as a
key market. Guericke and Hoffman saw the potential of the platform to replace
traditional job advertisements in newspapers, on classifieds web sites and
job-search sites. Among the competitors they targeted was Monster, a leading
online recruitment service founded in 1994 by Jeff Taylor. Unlike those
conventional recruiting sites with a dictionary of private résumés, LinkedIn
provided a networked résumé document—in Reid Hoffman’s words “a résumé 2.0: When
you’re finding people on LinkedIn, you’re finding them through a network as
opposed to a résumé database.”[34]With this business strategy, he predicted, LinkedIn would change both offline
and online recruitment in the long run.

In August 2005
LinkedIn secured a second significant revenue stream with subscription-based
premium services, among them business accounts for recruiters and researchers
with advanced search tools and a direct communication mechanism called InMail,
which allowed members to contact other members without an intermediate referral.
With InMail, the company changed a basic design feature of LinkedIn.[35]Business accounts holders were charged a monthly fee between $15 and $50,
depending on the upgrade. Within the next months LinkedIn launched additional
subscription products, targeting network members who frequently needed to
contact professionals as part of their job. By upgrading, recruiters and
researchers could find job candidates and experts not just from their networks,
but also from the complete LinkedIn network of 3.3 million registered
professionals. This business line helped LinkedIn to reach its target of
becoming a profitable business in the first quarter of 2006.[36]A third important revenue stream came from online advertising, targeted to
specific members based on their profile information, which LinkedIn sold to
businesses.

With this
diversified business model that offered different solutions to different types
of users, LinkedIn reached five million registered users in March 2006. The
platform had established itself as the world’s largest online business network
within three years after its launch. By growing its corporate platform and
adjusting its design to fit the constantly shifting industry, LinkedIn found
the "sweet spot" of profitability.

LinkedIn
expanded rapidly from its Silicon Valley roots, gaining users not only in the
U.S., but in over eighty countries—and 120 industries—as well. The openness of
American consumers to innovative new products, particularly software, contributed
significantly to LinkedIn’s success. After the network had been successfully
established in the U.S., it began to push into other countries. In Europe, the
network had 370,000 registered users by October 2004, but faced competition
from local networking sites for professionals which many countries had started
to develop. European main competitors such as the business networks Viadeo and Xing (former open BC), today’s market-leading network in the German-speaking
countries, tried to enter further markets across the continent and beyond. It would
take until 2009 for a German version of LinkedIn to be launched. As the largest
economy in Europe and a country with high social and professional networking
adoption rates, Germany represented an important market for LinkedIn.

After three years of leading marketing activities at
LinkedIn, Guericke started joining advisory boards in 2005. Thus far in his
career he had mainly worked on the marketing side, but as time went on he
became more and more interested in product development. In late 2006, Guericke was
given the opportunity to become chief executive at Jaxtr, a social
communication start-up located in Menlo Park. He left LinkedIn in December
2006, but continued to consult the company on its international expansion.
Jaxtr at that time offered free phone calls and text messages through voice over
IP to personal computers and mobile phones. Despite its rapid growth in 2007
which led to over ten million users in 220 countries by 2008, the company ran
into difficulty in monetizing its technology.[38] A few months after
closing an $11 million funding round in summer 2008, Jaxtr was forced to lay
off thirteen employees.[39] Not long after that it
was forced to acknowledge its failure to reach mass popularity. Guericke
resigned in the fall of 2008 and in June 2009 Jaxtr was acquired by Hotmail founder
Sabeer Bhatia for an unknown sum. After Jaxtr Guericke took a year off to spend
more time with his wife and two young daughters. The failure of Jaxtr had no
impact on his career, since failures are acknowledged as much as successes in
the risk-taking culture of Silicon Valley. Entrepreneurs see them as “part of
the process and (…) as opportunities to learn, grow and improve.”[40]

At present
Guericke is looking back across the Atlantic and is in great demand as a
networker and advisor supporting German start-ups. In May 2012 he joined Earlybird, a European venture capital firm with offices in Berlin, Munich, and
Milan, as a U.S.-based venture partner and liaison between Berlin and Silicon
Valley. In April 2014, Guericke expanded his role at Earlybird and became
managing partner.[41]
He is one of the many U.S.-educated, highly talented immigrant entrepreneurs in
the high tech sector “who have the linguistic and cultural abilities as well as
the institutional knowledge to collaborate with their home-country counterparts.”[42] In a press note Guericke explained:
“I have been interested for some time in supporting German entrepreneurial ventures
that are not copycats, but have the potential to be a success on a worldwide
scale.”[43]At Earlybird, Guericke is not making investments, but guiding the thinking
behind them.[44]
He uses his unique cross-cultural background to help innovative German and European
start-ups enter the American market, creating cross-regional collaborations
thanks to his immigrant and entrepreneurial experience.[45] As another recent
activity he joined the board of Doximity in March 2012, an online professional
network for U.S. physicians and health care professionals.

The immigrant background
does play an important role in how Guericke is perceived from the outside. In the
German media he is seen as a sought-after expert for social networking and the Silicon
Valley start-up scene and serves as a prime example of the successful German
entrepreneur in Silicon Valley. He is often described in terms of “one of the best known persons in German Internet start-up history” or as the German who
has made “the breakthrough in Silicon Valley.” Recently, German weekly news
magazine Focus selected Guericke as
one of ten “German top stars in Silicon Valley.”[50] The reason for such
attributions must be seen against the backdrop that German entrepreneurs are
underrepresented on the global Internet market.[51] Germany has created very few globally successful high tech companies.

Guericke still
has close ties to LinkedIn and admits being an avid user of the network even
though he is no longer involved in running it. On his LinkedIn profile he holds
the special status of the network’s “biggest fan.” After LinkedIn and Jaxtr
Guericke has slowed down, finding a new role in advising promising start-ups in
order to spend more time with his family and pursue other personal interests.

Like many
other Stanford University entrepreneurial alumni Guericke has always been
keenly dedicated to his alma mater. Giving back to their university has a
strong tradition among former students. Without the excellent education and
valuable contact network that Stanford provided, many entrepreneurial alumni
who have made their fortunes in Silicon Valley wouldn’t be in their current,
often high-salaried positions. Alumni have played a key role in maintaining the
university’s expansion and improvement. Since 2011 Guericke is a pro-bono
mentor for student entrepreneurs at Stanford University, helping them grow
their companies and providing guidance on vision and strategy.[52]In an interview in 2012 he explained his motivation: “I graduated from
Stanford's engineering school. I benefited from people in the industry coming
to the campus, so I feel like I should give back. I have started doing more
things on campus. Meeting smart, great students who are the next generation of
entrepreneurs is incredibly rewarding to me.”[53] Guericke, who is an enthusiastic hiker, often invites students to join him on walks on
the Stanford campus to discuss their business ideas. In addition to his
mentoring work, he is a guest lecturer in entrepreneurship courses at Stanford
University.

Despite the
media attention Guericke keeps his personal life private. He is married with
two daughters and lives with his family in California. As an Earlybird partner
he regularly travels to Berlin for work as well as visits his parents in northern
Germany.

After
graduation Guericke quickly worked his way up to leading marketing positions in
software and Internet start-up businesses in Silicon Valley. A talented networker,
he helped build—as co-founder of LinkedIn—a unique platform allowing
professionals to establish their profiles and reputations not simply as résumés,
but as valuable, permanent, searchable resources attracting opportunities and
attention. With the creation of LinkedIn he has helped revolutionize
professional networking, recruiting, and job seeking. In May 2011, LinkedIn was
one of the first social media companies to go public. It offered shares at a
price of $45 per share giving the professional networking web site a value of
$4.25 billion.[54]
Although the IPO has received mixed reviews by analysts evoking memories of the
dot-com boom of the late 1990s, LinkedIn has managed to consolidate its
position in the social media landscape as the world’s largest online professional
network with more than three hundred million members in over two hundred
countries.[55]
While the post-IPO success of other Internet companies such as Facebook and
Groupon has been uneven, three years after going public LinkedIn has been consistently
trading at more than three times its initial $45 IPO price.

The challenge
of technical novelty has remained a strong motivation as well as an
intellectual stimulation for Guericke and still drives his professional life;
he has always had a passion for new products that have the potential to improve
people's lives. The drive to innovate led him to leave LinkedIn in 2006 after
four years as vice president of marketing in order to take up a new challenge
with social communication start-up Jaxtr. In addition, his mentoring work at
Stanford University has provided him great satisfaction beyond monetary
rewards.

Guericke has
become one of only a few German-born entrepreneurs who has made a remarkable
career in Silicon Valley’s high technology industry. His more recent business ventures
also document the transfer of institutional and entrepreneurial knowledge from
the U.S. back to his home country, creating cross-regional collaborations
between Silicon Valley and the aspiring German high technology start-up sector
centered in Berlin.

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